A Company Due to Pay a Certain Amount of a Foreign

question 16

Multiple Choice

A company due to pay a certain amount of a foreign currency in the future decides to hedge with futures contracts.Which of the following best describes the advantage of hedging?

• A) It leads to a better exchange rate being paid
• B) It leads to a more predictable exchange rate being paid
• C) It caps the exchange rate that will be paid
• D) It provides a floor for the exchange rate that will be paid

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Definitions:

Companionate Love

A form of love characterized by deep affection, friendship, and emotional intimacy, often found in long-term relationships.

Passion Component

The component of love that comprises the motivational drives relating to sex, physical closeness, and romance.

Bottom Of The Barrel

Refers to the lowest or least desirable members of a group or set of things.

Men Who Do Not Marry

Males who choose to remain single and do not enter into a marital relationship.